Xi visit to India: The 'cold peace' endures

China's president embarked on a highly timely and consequential visit to India, writes Heydarian [AP]

The recent election of Indian Prime Minister Narendra Modi, whose parliamentary bloc managed to score the country's biggest electoral victory in almost three decades, has been accompanied by an increasingly assertive Indian foreign policy. Hailing from the Hindu nationalist Bharatiya Janata Party (BJP), Modi is widely seen as a tough no-nonsense leader who has vowed to defend the country's territorial integrity and realise India's vast economic potentials.

"I swear in the name of the soil that I will protect this country," Modi said earlier this year in a widely attended rally in Arunachal Pradesh, a region claimed by China.

Leveraging India's status as an emerging great power, Modi has expanded New Delhi's strategic relations with like-minded Asian states such as Japan, Australia, and Vietnam. China's rising territorial assertiveness from the Western Pacific to the Himalayas rattled many Asian neighbours, which have in turn sought greater US engagement in the region and explored new avenues for defence cooperation among themselves.

With China emerging as the world's leading economic powerhouse, Modi is intent on attracting more Chinese capital and technology. To turbo-charge its economy, India is also intent on tapping Chinese expertise in infrastructure development.

Of particular concern to China is the burgeoning relationship between India and Japan, Asia's two most powerful democracies. Modi has been particularly close with his Japanese counterpart, Prime Minister Shinzo Abe, who is known as a charismatic, nationalist leader intent on checking China's territorial posturing. In recent months, India and Japan have engaged in high-stakes negotiations over a series of economic and military agreements, capped by Modi's high-profile visit to Tokyo in early September.

Against the backdrop of deepening India-Japan relations, China's President Xi Jinping embarked on a highly timely and consequential visit to India on September 17 to prevent a full-blown estrangement between the two Asian juggernauts. The summit represented a historic opportunity to step up bilateral economic ties, ease diplomatic tensions and lay down foundations for a permanent solution to long-standing border disputes.

Business first

Displaying his diplomatic acumen, Xi wasted no opportunity to enhance his personal rapport with Modi, who welcomed his Chinese counterpart by hosting a lavish ceremony in his home state of Gujarat. Unlike his quintessentially bureaucratic predecessors Jiang Zemin and Hu Jintao, Xi indulged in bonhomie and fully immersed himself in the cultural festivities of his host. After all, Modi knows very well that India is in no position to directly challenge its giant neighbour, which fields a much more powerful armed forces and an indubitably more dominant economy.

India's once-promising economy has been undermined by rising inflation, rampant corruption, capital flight and trade imbalances in recent years. Much of India's recent economic growth has been fuelled by the expansion of the services sector, with India's most skilled citizens powering an information technology bonanza in places like Bangalore. But the sustainability and inclusiveness of India's economic expansion has been undermined by the disproportionately small contribution of the manufacturing sector, among other things. The manufacturing sector is crucial to the provision of large-scale, well-paying jobs to less skilled segments of the labour market, which constitute the majority of the Indian workforce.

With China emerging as the world's leading economic powerhouse, Modi is intent on attracting more Chinese capital and technology. To turbo-charge its economy, India is also intent on tapping Chinese expertise in infrastructure development. To address India's woefully lopsided bilateral trade with China, Modi has also been pushing for greater trade opening on Beijing's part to facilitate the export of Indian pharmaceutical, IT expertise, and agricultural products, among other things.

The two leaders managed to sign 12 different agreements in various fields, with China pledging $20bn in investments. But Xi's trip was overshadowed by reports of allegedly provocative manoeuvres by China's People's Liberation Army (PLA) and a standoff on disputed borders. As Australian strategist Rory Medcalf explains, "[Reports of Chinese incursions] began before Xi arrived, eased only towards the end of his visit, and resumed with a fresh 'incursion' into contested territory within 48 hours of his departure."

Alarmingly, it is unclear whether the PLA's activities were fully endorsed by Xi himself, who appears interested in easing tensions with the new government in India.

Stubborn disputes

Civilian and military elements within China's leadership, however, have their own reasons to send a clear signal to India. Upon assuming power, Modi eased restrictions, including environmental regulations, on civilian and military construction activities along its disputed borders with China, underscoring his commitment to stand up to Chinese territorial designs. The move has been described as a "complete shift in strategic thinking" for India. Modi's predecessors neglected infrastructure development in Arunachal Pradesh, partly to prevent an escalation of territorial disputes with China. Modi also dismayed China by inviting Tibetan Prime Minister-in-exile Lobsang Sangay to his inauguration ceremony in May.

The last time the two Asian giants had an outright military confrontation over their border disputes along the Line of Actual Control (LAC) separating the two countries, China managed to easily defeat its Indian counterpart. The 1962 Sino-Indian War embittered what was initially seen as a blossoming partnership between the world's most populous nations. It reinforced mutual suspicion, with territorial tensions intermittently poisoning bilateral ties. Despite some encouraging pronouncements, there is little indication that Xi and Modi are fully committed to resolving age-old territorial disputes.

India-Japan relations, meanwhile, seem more promising than ever. The Abe administration has pledged $35bn in investments over the next five years, as well as the potential export and technology transfer of Japan's much-prized amphibious aircraft US-2 to India. Japan is already a major investor in India and has been tapped as a key partner in the development of India's civilian nuclear industry. The two countries have also stepped up their joint naval exercises. Japan is expected to be a more regular participant at the annual India-US "Malabar" naval exercises held in the Bay of Bengal, and the Indian warships recently marked a highly symbolic port visit to Japan's Sasebo naval base near Nagasaki.

Overall, Xi's visit marked a highly symbolic attempt at striking a more cooperative partnership with India. But the relatively small amount of Chinese economic pledges and stubborn border disputes seem to have kept the cold peace between the two Asian giants. Ultimately, a Sino-Indian rapprochement will require a herculean diplomatic effort on both sides, with the aim of establishing a genuine compromise on bilateral territorial disputes.

Richard Javad Heydarian is a specialist in Asian geopolitical/economic affairs and author of "How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings."